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MANAGING INTEREST RATE RISK: DURATION GAP AND MARKET VALUE OF EQUITY - page 28 / 39

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Embedded options sharply influence the estimated volatility in MVE

Prepayments that exceed (fall short of) that expected will shorten (lengthen) duration.

A bond being called will shorten duration.

A deposit that is withdrawn early will shorten duration.  

A deposit that is not withdrawn as expected will lengthen duration.

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